NEW YORK, N.Y. – Billionaire activist investor Carl Icahn has acquired a 9.4 per cent stake in Family Dollar and is urging the discount retailer to explore ways to boost its value.

Shares of the Matthews, North Carolina, company rose nearly 10 per cent to $66.40 in after-market trading.

In a regulatory disclosure filed Friday, Icahn said he and his affiliates own nearly 10.7 million shares of Family Dollar. Based on its closing price Friday of $60.53, the stake is worth $647.1 million.

Icahn pointed to some of his prior investments, including CVR Energy, Forest Laboratories, Chesapeake Energy and Biogen Idec, where his tactics have helped turn around those companies’ businesses. He said he will seek to discuss strategies with Family Dollar management as well.

Family Dollar Inc. officials weren’t immediately available to comment late Friday.

The news also triggered a rally in the shares of rival Dollar General Corp. amid speculation Icahn could push for a merger with Family Dollar. Shares in Dollar General, the nation’s largest dollar-store chain with about 11,100 locations, rose more than 4 per cent after-hours.

Family Dollar’s low-income shoppers are still struggling as the economic recovery wears on, and its stock is down in the past year while the broader markets are booming. Its revenue and net income for the three months ended March 1 both declined, and sales at stores open at least a year — a key metric of a retailer’s health — slipped 3.8 per cent.

The company said in April it would close 370 underperforming stores, slow the pace of new store openings and permanently cut prices on about 1,000 basic items.